Sacramento

3 min read

The Sacramento multifamily market is experiencing strong demand, even on the heels of robust construction activity, said David Diggs, Senior Regional Sales Manager with Chase.

Sacramento’s vacancy rate rose to 6.8% in the fourth quarter of 2024, according to CoStar data, but that’s largely driven by recently constructed inventory. 

“Quality-of-life factors and relative affordability in close proximity to the Bay Area continue to attract renters,” Diggs said. 

          

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Sacramento continues to have lower housing prices than other major California cities, though the affordability gap is shrinking. Rents grew 1.3% year over year in the fourth quarter, slowing slightly due to the increase in inventory, according to CoStar.  

Supply growth expected to ease

The Sacramento multifamily market saw a significant increase in construction in recent years, but apartment construction is slowing dramatically. 

The area is expected to have among the fewest new apartment deliveries as a share of overall inventory in the nation in 2025: just 1.5%, according to CoStar. 

Combined with robust renter demand, limited supply growth should support healthy trends in Sacramento rents and vacancies, Diggs said. 

Rising property management expenses

Property management expenses have been rising, with insurance costs seeing particularly large jumps. 

Some cost increases are unavoidable. But closely monitoring expenses can help investors identify opportunities to lower those costs within their control. 

Strategically managing payments, meanwhile, can help investors make the most of their liquidity. For instance, accelerating receivables and extending payables lengthens access to operating funds, giving investors flexibility to use or invest them. 

“Having great solutions for payments and liquidity can help investors effectively manage their capital in an inflationary environment,” Diggs said. 

“Quality-of-life factors and relative affordability in close proximity to the Bay Area continue to attract renters.” 

Ongoing interest rate uncertainty

Interest rates remain elevated as the Federal Reserve waits to see more signs of inflation cooling toward its 2% target. It’s one factor driving the year-over-year increase in Sacramento’s cap rates, which were in the mid-5% range in the fourth quarter of 2024, according to CoStar data.

The timeline for additional Fed easing is uncertain. Some of the new administration’s early policy moves could put upward pressure on prices, complicating efforts to forecast interest rates’ path. Still, multifamily investors seeking or refinancing apartment loans can work closely with their lender to ensure they’re prepared to act quickly if rates dip.

Investors may also want to explore financing that offers options if the rate environment changes, such as shorter terms or flexible prepayment premiums, Diggs said.

Whether you’re ready for financing or looking to streamline your operations, reach out to our Sacramento lending, payments and liquidity team.    

JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/commercial-banking/legal-disclaimer for disclosures and disclaimers related to this content.

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